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Data security in business is critical: if a data breach happens, this data can get to competitors or, even worse, a company may face litigation, fines, and a decrease in consumer confidence. As a result, this can negatively affect the company’s ability to innovate and remain profitable and competitive in the future. That’s why many companies are in constant search of perfect technologies that will provide them with a needed level of security. In particular, blockchain has been considered one of these technologies for many years now.
Indeed, the concept of blockchain has long become an unspoken synonym for the words “transparency” and “security”: its decentralized architecture allows businesses to provide cutting-edge services and effectively address security gaps in their digital solutions that were not available or difficult to implement with their centralized alternatives. Below we’ll describe in more detail how blockchain-based projects achieve an unprecedented level of reliability.
According to Grand View Research, the global blockchain market size was valued at 10.02 billion USD in 2022 and is expected to grow at a CAGR of 87.7% from 2023 to 2030. Behind the scenes, this says that companies around the world consider this technology as one key for their further growth. You can also check more information about the future of blockchain in this article.
Indeed, even today, such examples of world leaders in the digital market as Cisco, Microsoft, Amazon, IBM, Huawei, and many others actively use blockchain not only to optimize their internal business processes but also to provide blockchain-based services to their customers, helping them solve problems related to digital security in the most efficient way.
In the next section, we’ll delve into specific blockchain solutions that help businesses overcome security challenges.
Blockchain is a decentralized data ledger for storing and transferring digital assets between computer network nodes. All data once written to this ledger remains unchanged and cannot be deleted. There are several examples of blockchain—let’s take a look at them below.
Public blockchains (Ethereum and Bitcoin are the most well-known examples of public blockchains), are completely decentralized and always open to everyone. This means that any member of the network can view the history of transactions and create new ones. They are less susceptible to typical network attacks due to their scale. At the same time, their scaling can be quite difficult, and their development is expensive.
A private blockchain restricts access to data and requests permission to participate. To join it, the user must be invited— which means you need to ensure some central authority for its management. Such blockchains are most often used in companies that need to provide advanced data security. Also, there is no need to wait for transaction confirmation from all network members, which means that they are completed faster. In general, if you ensure the reliability of the central governing body, this type of blockchain can be considered the most secure of the existing ones.
This type of blockchain is a combination of public and private ones. In particular, hybridity is achieved through advanced network settings that allow individual users to participate in consensus and publish their transaction data. As for the disadvantages, they also lie in scaling. The fact is that, as the number of users grows, their preferences about the privacy of their data can become difficult to manage with a dedicated central authority.
Such blockchains include reliable participants who have been pre-approved by a dedicated governing authority. Thus, only these members participate in the consensus. This type of blockchain is often used in B2B solutions (for example, when collaborating with large organizations) that can afford not to be completely decentralized.
In a nutshell, data security means protecting digital information from unauthorized access, corruption, or theft. In the context of using the blockchain, these problems are solvable (however, if we’re talking about unauthorized access or theft, then public blockchains don’t solve this type of security problem). At the same time, blockchains protect data from corruption (if the hacker attack was not successful).
Along with this, you need to understand that the blockchain doesn’t prohibit changing data—it all depends on the logic of the smart contract. If the data is the balance of funds in a user’s wallet, it can be changed according to certain rules. The same applies to any other data—it all depends on which smart contract they are created with and whether the contract provides for data modification. What the blockchain does protect is the data history.
If we consider the example with crypto wallets, when the user sees a certain amount on its balance, this means that it won’t be possible to change it to a previous date. In turn, the user will be able to check in the history of any changes with their account and find out exactly how these changes were initiated. Next, let’s find out the security specifics that the blockchain provides.
Decentralization in blockchain means the transfer of control and decision making from a centralized entity to a distributed network. In the context of blockchain data security, this approach to the organization of the data ledger provides transparency.
A smart contract in the blockchain is a program that controls the terms of a transaction and, if these conditions are met, fulfills its obligations.
All blockchain participants have their own unique access key, which excludes the substitution of identities (for example, when this key is stored on a specialized physical device, it’s impossible to steal it, unless the attackers physically rob the owner).
All data within the network is encrypted using advanced cryptographic methods (we mean converting ordinary information, plaintext, into an unintelligible form, ciphertext), further guaranteeing blockchain cybersecurity.
The completion of any action by a blockchain network participant requires confirmation (consensus) from trusted parties. Thus, manipulations contrary to the rules of the network are excluded here.
At the same time, blockchain for cybersecurity should not be considered a one-size-fits-all solution against all kinds of network threats, because cyberattacks still exist.
Phishing is a set of techniques that trick a user into revealing their password, credit card number, and other sensitive information. In the context of the blockchain, this information usually means a private key that is used to access the network by a specific participant. Oftentimes, scammers pose as support representatives.
Since the blockchain acts as a kind of digital data traffic, some hackers use tools to intercept it on the way to internet service providers. However, unlike other types of attacks, victims cannot recognize this one when it’s being performed.
A Sybil attack is a blockchain data security threat in an online system where a hacker attempts to take over a network by creating multiple accounts, hosts, or computers. As a result, this leads to failures in the operation of the blockchain.
A 51% attack consists of taking control of the ledger by a group of miners. If they manage to get more than half of the mining power, they will be able to deliberately change transactions and even reverse them. Note that this type of attack is not applicable to private blockchains.
To help you eliminate possible threats associated with blockchain vulnerabilities, we’ve prepared a short list of tips.
Despite the high reliability of blockchain cybersecurity and, in particular, the reliability of the registration procedure on the network due to the use of a private key, fraudsters still have loopholes to log in under the guise of a real participant. To prevent this, you can implement two-factor authentication (2FA), which will be tied either to the user’s device or to the user’s biometric data. This is not a universal method, since it can also be hacked—however, if enabled, the implementation of an attack needed to get into the system will be much more expensive and time consuming. You can also find out our approach to implementing a registration procedure in our article about a blockchain-based platform for scientific and academic research.
You can also appoint trusted network members who will be responsible for confirming transactions within it. You have to pay special attention to the procedure of choosing each of them because blockchain cybersecurity will depend on these members.
Although updates are an integral part of keeping any software viable, sometimes they are aimed at expanding functionality rather than optimizing what has already been created—and this is a key mistake. The fact is that, with the development of IT technologies, the techniques that hackers use may also be improved. Therefore, what was previously considered safe may no longer be so today. This aspect especially concerns smart contracts that are responsible for confirming transactions and verifying that both its parties fulfill their conditions.
VPNs have always been considered a one-stop network security solution for end users, so why not apply them to blockchain security as well? Suggest that members of your network always connect to it via a VPN. In this way, they’ll be able to protect their personal data that they transmit through the network.
Phishing attacks are a popular threat to blockchain users. Fortunately, today there are blockchain security tools that can prevent them. You can also provide your users with guidance on recognizing fake messages and emails so that they can always distinguish the notifications from your real tech support with messages created by hackers.
Of course, you should not neglect penetration testing of your solution to try to find vulnerabilities before hackers do it. In particular, to implement a reliable blockchain for security, you’ll need to contact the company where ethical hackers work and request the appropriate services. As for specific tools that can be useful in this difficult task, we would like to mention such examples as Truffle, Ganache, TestRPC, Manticore, SmartCheck, Solgraph, Octopus, etc.
With all the benefits of blockchain for cybersecurity, it’s important to understand what problems you may have to deal with.
When the blockchain is public, controlling access rights to certain types of data is a difficult task. In this case, you can implement a permissioned blockchain that will restrict access to data to the general circle of network users and provide it only to trusted parties.
As the number of blockchain users grows, it may need to scale to provide all of them with the same transaction speed—and this can be quite a challenge. Moreover, scaling may begin to contradict the concept of decentralization and thus raise reasonable blockchain security concerns.
It’s quite difficult for blockchain solutions to comply with generally accepted and industry-specific standards for user data security (such as GDPR) . This is due to the fact that the blockchain, by definition, doesn’t allow you to delete records, which means that none of the network participants will be able to remove their data from public access upon request. Therefore, to ensure compliance with these standards, you may need an experienced development team with a long track record of creating such solutions.
Some blockchains are quite difficult to integrate with third-party services, which can make it difficult to expand their capabilities with new features. This, in turn, imposes restrictions on scalability and maintaining the continued viability and relevance of these networks. At the same time, today there are standards according to which blockchain solutions should be developed to prevent this problem.
Finally, blockchain-based solutions may expose their users to risks that are not typical of traditional centralized solutions. These include:
To cope with all these problems, you must enlist the support of a reliable team of developers who will prevent all of them at the stage of creating your solution. For instance, you can consider us, and in the meantime, check one of the most significant examples of building a blockchain-based exchange.
Nowadays, such business industries as healthcare, finances, banking, insurance, and supply chain are in critical need of implementing blockchain solutions. The fact is that the safety and security of data is critically important for them, and often only decentralized solutions based on smart contracts can provide the level of reliability of operations that their customers expect.
To be more precise, blockchain provides users with the ability to manage their data and who they share it with. In addition, the introduction of blockchain solutions eliminates the need for third parties to participate in transactions. Thus, this technology can become an indispensable tool in creating privacy-oriented products aimed at autonomizing user actions.
In particular, with regard to enterprises, the blockchain can be used for:
These are just the most basic uses of blockchain for data security, and in practice, its potential can be unlocked in much more non-standard ways. It’s only important to understand that each particular case will require your development team to fully understand what they do and why, so that the created solution provides true security and not just adds problems with it.
If you are looking for just such a team, you can choose us as your digital partner. Also, to verify our expertise in this software development niche, you can check out our success stories on blockchain software development.
Now you know the answer to the question, “What is blockchain cybersecurity?” Summarizing the above, the blockchain ensures a secure and distributed exchange of information of any kind. Usually, this is historical data on all operations: financial transactions, registration of goods at a certain delivery point, etc. Also, the absence of third parties in these operations reduces the cost of their execution (since no commission is required for their confirmation).
As a result, blockchain in cybersecurity is currently one of the hottest trends. If you’re interested in implementing a blockchain-based software solution for your business, feel free to contact us. We’ll provide you with the best specialists with experience in this niche to create an advanced and cost-effective tool for achieving your business goals.
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